Eastern Europe is one of the top locations for software development outsourcing. Over the past eight years, its outsourcing market more than doubled, surpassing 7 billion euros. What attracts foreign companies to the region is a large pool of skilled professionals, affordable rates, and a healthy business climate.
In this article, we’ll explain what makes IT outsourcing in Eastern Europe a popular choice for many global companies. We’ll also review the competitive advantages of each major outsourcing destination within the region, highlighting where to look for competent teams for software development projects.
Key takeaways:
- Eastern Europe offers a vast talent pool of 1.5 million professionals and costs up to 3.5 times lower than in the US.
- Poland leads the region with the largest tech workforce at 430K+ professionals.
- Beyond cost savings, Eastern European outsourcing provides significant advantages, including strong STEM education, high English proficiency, and minimal time zone differences with Western Europe.
- When selecting an outsourcing destination in Eastern Europe, companies should evaluate country-specific factors such as talent availability, economic stability, business climate, and tax incentives to find the optimal combination of quality and cost.
Why outsource software development to Eastern Europe
Outsourcing IT projects is no longer just about cost savings. According to a survey by McKinsey, only 34% of companies cite lower costs as the main reason for going offshore, while 42% are driven by improved access to talent. With a talent pool of 1.5 million ICT professionals, Eastern Europe offers exceptional potential.
Let’s explore the key benefits of the Eastern European market.
Cost-effectiveness
The cost of living in Eastern European countries is 30% lower than in the US. This means that local software developers can live comfortably while charging much lower rates than their Western counterparts. For example, American programmers earn an average of $161,000 a year while their Polish peers make around $45,000 with similar experience and qualifications. So, US companies outsourcing to this region will pay almost 3.5 times less than at home.
The table below shows average cost savings when hiring a tech team from the four largest outsourcing destinations in the region. Other countries in the region—Bulgaria, Moldova, and Slovakia—offer comparable figures.
| Role | No. of people | Average salary in the US | Average salary in Poland | Average salary in Romania | Average salary in the Czech Republic | Average salary in Hungary |
| Project manager | 1 | $136,000 | $41,000 | $24,000 | $32,000 | $29,000 |
| Front-end developer | 2 | $103,000 | $35,000 | $20,000 | $36,000 | $20,000 |
| Back-end developer | 2 | $115,000 | $35,000 | $24,000 | $37,000 | $24,000 |
| UI/UX designer | 1 | $121,000 | $24,000 | $20,000 | $29,000 | $20,000 |
| QA engineer | 1 | $109,000 | $30,000 | $20,000 | $20,000 | $20,000 |
| DevOps engineer | 1 | $142,000 | $44,000 | $36,000 | $43,000 | $41,000 |
| TOTAL | 8 | $944,000 | $279,000 | $188,000 | $270,000 | $198,000 |
*All salary estimates are provided by Glassdoor.
Eastern European outsourcing vendors typically use flexible engagement models and transparent pricing with no hidden costs. Thus, businesses can plan budgets confidently while tailoring the scope of services to their needs.
Favorable business climate
Many countries in Eastern Europe offer tax incentives for IT and R&D projects. These stimuli aim to create a favorable business climate for tech companies, which means they can attract foreign investments.
For example, Poland has established special economic zones offering tax exemptions that have attracted companies like Microsoft, Google, and IBM to open development centers there. In Romania, software developers enjoy a significant tax advantage, with complete income tax exemption on salaries, benefits, and bonuses up to 10,000 lei, which has helped companies like Adobe and Oracle expand their presence.
Skilled tech talent
Eastern European developers rank high in global coding competitions on HackerRank and SkillValue. For instance, Poland ranks #3 in HackerRank’s country rating, while Hungary and the Czech Republic made it into the Top 10. The CEE region is home to renowned tech companies, such as UiPath (Romania), Avast (Czech Republic), and CD Projekt Red (Poland).
Such a high skill level comes from the region’s historically strong STEM education system. Self-education is also very common among Eastern European programmers. After getting their degrees, local software engineers continue to build their knowledge, stay updated with the latest technological advancements, and actively participate in coding communities.
What’s more, IT specialists in Eastern Europe gain diverse expertise from working on projects outsourced by companies worldwide. This international exposure allows them to gain valuable experience solving problems in various industries, such as finance, healthcare, logistics, and retail.
Privacy and data security
As a part of the European Union (EU) most Eastern European countries are subject to the General Data Protection Regulation (GDPR). So, outsourcing vendors operate under some of the strictest data protection laws in the world.
Moreover, many IT companies in Eastern Europe have implemented robust security protocols, including secure authentication methods, virtual private networks (VPNs), and data encryption. This way, client data is protected throughout the whole development process, from concept to delivery.
Work ethics
Cultural alignment is another key benefit of IT outsourcing in Eastern Europe. Companies can expect local teams to observe deadlines and follow high-quality service standards. Similar cultural values mean that an Eastern European team can easily integrate into the company culture of a North American or Western European organization.
What’s more, Eastern European developers have no problem challenging the status quo and coming up with non-conventional solutions to problems, or asking clarifying questions to fully understand the task.
Response time
Eastern European outsourcing companies value time as much as their Western counterparts, resolving issues promptly. This responsiveness isn’t just about following contractual obligations—it reflects the professional work ethic that’s deeply embedded in Eastern European business culture.
For companies based in Western Europe, communication is straightforward since they share similar working hours. Teams typically respond within one or two hours during the business day. For US companies, despite the greater time difference, there’s still a 3-4 hour overlap with Eastern European working hours. Any requests sent outside these overlapping hours are addressed first thing when the team returns to work the next day.
Main Eastern European outsourcing destinations
Popular outsourcing destinations in Eastern Europe differ in developer specialization, foreign language proficiency, and the country’s overall stability. These factors can substantially impact project success and should be carefully evaluated when choosing a software development company.
Poland
Poland boasts the largest talent pool of ICT professionals in Eastern Europe, with over 430,000 people. Moreover, thanks to its strategic location in the middle of the region, local outsourcing providers can easily access major European markets while maintaining optimal time zone compatibility with Western clients.
These factors make Poland one of the best choices for finding tech experts with traditional competencies like Python or Java and sought-after technical skills, such as data scientists, data analytics specialists, and programmers with expertise in emerging technologies like artificial intelligence (AI). By partnering with an outsourcing provider like Neontri, international companies can leverage the country’s deep talent pool to deliver innovative software solutions while maintaining high quality standards.
Poland also ranks #6 on developer skills on TopCoder, the highest among CEE nations. The country’s major cities—Warsaw, Krakow, Wroclaw, and Gdansk—have become vibrant tech hubs with strong IT ecosystems. In addition to hosting numerous outsourcing providers, they are home to offshore development centers for tech giants like IBM, Microsoft, and Samsung.
Companies like Neontri exemplify Poland’s tech excellence, leveraging the country’s deep talent pool to deliver innovative software solutions while maintaining the high quality standards that Polish development teams have become known for.
Seamless communication with Western companies isn’t an issue. Poland is #15th in the global English proficiency ranking, so international companies won’t experience any language barriers.
Poland has a stable economic environment. With the country’s GDP projected to grow by 3.4% this year, it demonstrates resilience to global economic pressures. This stability translates into a reliable business environment for software development outsourcing.
Czech Republic
In the Czech Republic, 4.3% of the workforce is employed in the ICT sector, creating a talent pool of up to 130,000 tech experts. The presence of numerous universities with solid technical education ensures a steady influx of around 4,000 graduates into the country’s IT industry annually.
The abundance of people with strong software development skills and a well-developed IT infrastructure have made the Czech Republic an attractive destination for global investors like Skype, Cisco, and Oracle. That said, the country’s main tech specialization lies in the game development niche, with Brno, its second-largest city, serving as the primary hub.
Alongside high English proficiency (#25 in the global ranking), the Czech Republic has good business connections in Europe. The country’s geographic proximity to Western European markets has made it a popular outsourcing destination for companies looking for technical expertise and cultural alignment.
However, the cost of living in Czech cities is higher than in the neighbouring countries. Together with relatively high income taxes, it makes local outsourcing companies to charge higher rates.
Romania
Romania has the third-largest tech talent pool in the CEE region, with nearly 192,000 developers. Like Poland and the Czech Republic, Romania ranks high in English proficiency, which simplifies communication with US and Western European clients.
Yet, compared to other Eastern European countries, particularly Poland, Romania has a less developed IT ecosystem. 68% of its IT development capabilities and revenue are concentrated in the capital, Bucharest, with only a few business centers in other regions. Additionally, the country has been struggling with a brain drain for nearly a decade, with many tech experts seeking better opportunities abroad.
Hungary
Hungarian tech talent pool brings together over 80,000 developers. The ICT sector is heavily export-oriented (13% of the country’s total exports), with 55% of local IT companies generating revenue by providing software development services to foreign clients. This means that software engineers are accustomed to working with companies worldwide.
One of Hungary’s key competencies is smart mobility. For example, NNG, a Budapest-based navigation software startup, achieved international success in the automotive industry. Additionally, the country’s digital transformation covered the implementation of intelligent transportation systems in several cities.
Hungary has a favorable business environment, with the EU’s lowest income tax (9%) and multiple government initiatives supporting the IT sector. Ranked #17 worldwide on English proficiency, the country is a good choice for international companies that value smooth communication.
However, the rising political tensions between Hungary and the rest of the EU might hamper its economic stability, affecting the local outsourcing providers. On top of that, the country’s cybersecurity ranking has slightly declined in recent years, which raises some concerns about its data protection and security capabilities.
Bulgaria
Bulgaria is another place to consider for IT outsourcing in Eastern Europe. It boasts a talent pool of 70,000 tech professionals and an ICT market that has experienced a rapid growth of 300% over the past seven years. Currently, the country is home to approximately 10,000 tech companies, 70% of which are export only.
Bulgaria has the highest proportion of female software developers in the EU, 29% vs EU average of 19%. This gender ratio is a big plus for attracting diversity-conscious companies.
Another benefit of the nation’s IT sector is the competitive pricing of outsourcing services. With one of the lowest costs of living in Europe and a flat income tax of 10%, local teams can charge less than their counterparts in other EU countries.
However, compared to countries like Poland and the Czech Republic, which lead the region’s outsourcing landscape, Bulgaria’s IT market is still evolving. This may result in inconsistencies in service quality and talent availability.
Moldova
Moldova boasts a talent pool of 24,000 ICT professionals, accounting for 1% of the population. On top of that, the country produces over 2,000 computing and tech graduates annually. Although 80% of the services provided by Moldovan software development companies are exported, the tech sector still lags behind other regional outsourcing destinations in Eastern Europe.
Moldova’s IT industry has strong governmental support, which includes the IT Park regime, which grants residents a flat 7% tax on monthly turnover. Over the past decade, the country’s ICT sector has even seen dynamic growth.
However, the country’s economic and political instability limits the sector’s potential. Many skilled tech professionals seek higher-paying jobs abroad, so it’s hard for local outsourcing providers to retain top talent.
Additionally, as a non-EU country, Moldova’s data protection laws are not fully aligned with EU standards such as GDPR. So, while outsourcing to Moldova allows companies to save costs, they must carefully weigh the associated risks.
Slovakia
Slovakia has a relatively small but highly skilled workforce in the ICT sector, with 50,000 tech professionals. The country benefits from a strong educational system—six universities with ICT faculties—producing around 3,000 specialists per year. The pmain IT hub is the capital, Bratislava, with smaller cities like Košice and Žilina expanding their tech ecosystems.
Slovakia enjoys a strategic geographical location with easy access to Western European markets. The country’s high English proficiency (#18 globally) further enhances its appeal to international companies. Drawn by Slovakia’s favorable business environment, global players like Accenture and IBM have already set up offices here.
But Slovakia also has its challenges as an outsourcing destination. Rising political tensions, like in Hungary, threaten its economic stability. High income tax rates (19–25% for individuals and 21% for companies) drive up labor costs and make IT outsourcing services more expensive.
How to outsource software development to Eastern Europe
IT outsourcing in Eastern Europe offers a wealth of opportunities, but the process requires careful planning and consideration to achieve optimal results. Here’s a brief overview of its key stages:
- Choose the country. Narrow down options based on the factors most important to your business. For example, if you need a stable environment and a large tech talent pool, Poland is an excellent choice. If you are willing to save money and accept emerging market conditions, countries like Bulgaria and Romania provide good value propositions.
- Outline your requirements. With hundreds of vendors offering software development services in each destination, it’s essential to clearly define project goals, scope, and expected deliverables. This will help you choose the provider that fits your needs best.
- Choose the right outsourcing model. That’s no less important than outlining requirements. If you need additional hands or specialists with specific skills added to your in-house team, staff augmentation is a great option. And should you want to delegate the entire project to an external team, go for classic outsourcing.
- Research your vendor candidates. With all the criteria lined up, you can start searching for an outsourcing company. Carefully review their services, tech skills, and domain expertise. Look for a partner with a proven track record in your industry and one that aligns with your company’s culture and workflow.
- Schedule meetings with shortlisted IT companies. Engage with the vendors you’re considering. Prepare a list of key questions to evaluate their competencies, communication style, and work processes. During the meeting, assess the company’s values, cultural fit, and general understanding of your business needs.
- Make the final decision. Carefully consider all the factors that matter most to the project before committing. Remember, the cheapest option may not always be the best if it compromises quality or reliability.
Grow your business with Neontri outsourcing services
Neontri has 10+ years of experience serving international clients. We offer exceptional software development expertise, robust security protocols, and high-quality technology solutions that help your business grow. With transparent communication, flexible engagement models, and a commitment to meeting deadlines, you can rest assured that your project is in good hands. Our dedicated team of skilled engineers combines technical excellence with deep domain knowledge to deliver custom software products tailored to your specific needs.
We offer a multifaceted outsourcing solution that includes seven service offerings:
- The Try & Hire model allows you to test the candidates before hiring them permanently. This way, you know exactly what assets and skills the developer can bring in, yet you don’t have to commit long-term.
- Staff augmentation, or body leasing, is an outsourcing practice in which external professionals are hired to work directly with the client’s in-house team to bolster their existing capabilities.
- Recruitment process outsourcing (RPO) is a way of delegating recruitment operations to an external vendor. As an RPO service provider, we offer tried and tested practices to streamline your recruitment process, including such services as job advertising, reviewing resumes, interviewing and vetting candidates, employee management, and other HR-related tasks.
- Permanent placement helps you find candidates who are a long-term fit for your company.
- The Employer of Record (EOR) services allow you to hire staff abroad without setting up a legal entity in that country. As your EOR partner, Neontri will act as a legal employer for your international team, handling everything from onboarding to tax compliance.
- Agile POD is a self-contained, cross-functional delivery team comprising developers, analysts, QA engineers, DevOps specialists, and technical leads. It brings a comprehensive set of skills to each stage of the development process.
- Team augmentation enables companies to hire an entire team of software engineers to bridge the skills gap or increase the capacity of their existing in-house team. The client has complete control over team composition, from selecting team members to approving any changes in the structure.
Final thoughts
Eastern Europe remains a top outsourcing destination for Western companies thanks to several key factors: a large pool of developers, exceptional technical expertise, high English proficiency, cultural proximity, and minimal time zone differences.
However, simply opting for IT outsourcing in Eastern Europe isn’t enough; you also need to select the right country. The differences in talent pools, tech ecosystems, and business environments across the region can significantly impact your software development project.
If you’re looking for an optimal cost-quality ratio, Poland should be at the top of your list. With Neontri as your technology partner, you can leverage all the advantages of Eastern European outsourcing while ensuring premium service quality and reliable project delivery. Contact us today to discuss how we can help with your specific software development needs!
FAQ
How does the cultural affinity between Eastern Europe and Western countries impact outsourcing relationships?
Cultural proximity between Eastern and Western Europe significantly enhances outsourcing relationships by enabling smoother communication, shared work ethics, and aligned business values. These similarities reduce misunderstandings, foster trust, and allow Eastern European teams to integrate seamlessly with Western companies, ultimately leading to more successful project outcomes.
Resources
- https://www.statista.com/statistics/1551778/cee-it-outsourcing-revenue
- https://www2.deloitte.com/us/en/pages/operations/articles/global-outsourcing-survey.html
- https://cee.pwc.com/investing-in-cee.html
- https://www.statista.com/statistics/1429627/cee-number-of-software-developers-by-country
- https://www.topcoder.com/community/statistics
- https://hepa.hu/uploads/5d73c0dc21c70b44496f2ec068e29bffce26769e_60e41ba23625f.pdf
